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Guide to the scams of matrix and pyramid schemes with a list
They were one of the biggest scams from the 1960s to the 1980s and sadly they still exist today. The internet seems to have rejuvenated them. This article will discuss them so that you have a better understanding of how sales people falsely state they work and how they falsely claim that great sums can be made.
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It is commonly a way that claims to make investors rich from depositing a large one off payment of cash. In return for enrolling more investors the original investor will get a vastly inflated return. Though the reality is that few people, if any, will see a return and many, if not all, will even loose their original investment. The only person to make anything is the con man or woman behind it, ie the person at the peak. He or she will gain the investment of the people at each of the tiers and after getting his or her hands on the cash or cheques of the lower tier investors will probably never be traced or found.
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Money Pyramid Scheme
The money pyramid scheme is the classic example. Investors will typically be asked to invest several thousand pounds and if they can sign up a set amount of people, usually two to make it seem achievable, in a set amount of time. The time scale is often as low as one week or a month. If the investor can achieve this they are promised returns such as ten times the amount of their original investment. Such a high return in such a short time scale is the reason why so many people are tempted into it. Other reasons is that friends and family entice them to join up to help them and get an investment back in return.
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There were and still are many disadvantages. People who invested in pyramid scams had to approach absolutely everyone they met and tell them about this great money making opportunity. They were so desperate to get their sign ups or second tiers that they would harass anyone and badger them into joining. Many investors not only lost out financially, but they also lost many friends and relatives. Many made a few enemies from those they signed up to this false investment and subsequently lost their hard earnings. Many people lost retirement nest eggs and life time savings. Others went into a life time of debt, re-mortgaged their homes or had to sell their houses to pay off debts and many became bankrupt. All because of the greed and harassment of upper level investors. None can stay upright when the foundations are broken and many investors could not lay their foundations, ie get lower level sign ups. So it would collapse and this is where it came into place. There would be small print in a contract that if the investor did not achieve a set number of lower level investors by a set time frame then they would forfeit their initial investment with no re-dress. This went straight into the pocket of the top level investor, ie the person who set up the fraud, who would laugh all the way to the bank.
Another variety are the matrix schemes where people join in the hope of getting a product when they rise to the top by getting a set number of sign ups below them. Typical reward products in a matrix scheme would be new brands of televisions, laptops and other high priced electrical equipment.
So are they all a scam? In our experience, yes. We would love to learn of those that are not a scam because the claimed returns are so high we could invest and retire! The reality is that only hard work and safe and shrewd investments will give you a return on your time and money. It would be better to invest your £1000s in a safe investment like premium bonds where you can get a return on your investment and your original sum that you deposit will be returned to you. The best advice is to stay well clear of them.
List of Pyramid Schemes
Conmen have tried to disguise their scams by using other names for them. This list of pyramid schemes include gifting circles, women empowering women, liberty scheme, people in profit, donation club, calculator scheme, debt reduction and circles of success.
Is Kleeneze A Pyramid Scam?
Many people see the Kleeneze opportunity as one but we have successfully done this and can vouch that it is not. There is a small investment (as little as £75) and this is why some people have claimed Kleeneze to be a pyramid scam. But for the small investment people will get a business pack and the ability to earn each week - two things that classic scams do not offer.
It is also one of the founding members of the Direct Selling Association and support their distributors in making money. Indeed many work full time and make thousands each month from selling their products in their local areas. There is the opportunity to build and support a downline and this is another misconception for people who mistake it for a scam. It is a multi level marketing company and people do try and concentrate on their down line rather than focusing on selling the products which can earn just as much.
We have written more about it in the Kleeneze Reviews.
Do avoid the classic sting though: no-one gets rich quick in this life. If you have a large sum to invest then look carefully for a safe investment using a well know investor such as National Savings. Help keep them a thing of the past by ignoring any offers of joining, especially e-mail offers.
Other pages of interest in the scams section include:
How To Avoid Internet Scams
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